Agenda item

Councillor Ivimy noted that the response given by Councillor Andrew Jones to the public question at Council on 29 January 2016 regarding the legal status of the Council's housing Joint Venture was misleading.

The Leader noted that he was aware that a complaint had been received regarding the response to this public question and advised that this was purely accidental. There was no intention to mislead at all.

Councillor Jones accurately explained that legal advice had been received which concluded that the Joint Venture was likely to be judged ultra vires. That legal advice was obtained by the funders whilst the Council's own legal advice is that the Joint Venture was not likely to be judged ultra vires.

However the decision to wind up the LLP and create a new company in order to remove any uncertainty from potential funders is a direct result of these competing counsel's opinions and the risk to the JV this caused.

This uncertainty and the risk that the JV could be judged to be ultra vires led to the decision by the Council to change the structure. Had the JV not originally been established as an LLP, neither the risk nor the need for the decision would have arisen. This is what caused the delay, which is the answer to the question asked.

Councillor Jones would like to apologise for any misunderstanding this has caused.

The Leader asked Councillor Ivimy if she accepted the apology.  Councillor Ivimy acknowledged that she did but expressed her concerns in relation to the planning consideration of the development which proposed 100% affordable housing to be provided at Edith Summerskill House largely funded by S106 contributions. She noted that this was in breach of the GLA planning guidelines which required a maximum of 40%.

She also added that S106 contributions was meant to be used to mitigate the adverse impact from the development and not to fund more developments. She questioned whether it would be an appropriate use of the funds and if officers had sought legal advice in this respect. Officers advised that the S106 contributions were secured for either affordable housing or social and physical infrastructure purposes in the Borough, and therefore perfectly legal to use that for this purpose.

Councillor Ivimy believed that there would be a financial loss to the Council due to the total number of affordable housing units involved at Edith Summerskill House. She urged Cabinet to reconsider the proposal.

The Leader noted that any potential financial loss would be compensated by the very robust figure negotiated for S106, which had been the most successful anywhere in the country, and that the Administration would use it to tackle the housing crisis to accommodate local people.

RESOLVED:

1.            That approval be given for the Council to take such actions as are necessary to wind up the LLP and to establish a new company, with the Council becoming a shareholder in the New Company alongside Stanhope Plc.

2.            That delegated approval be granted to the Cabinet Member for Economic Development and Regeneration, in conjunction with the Director for Planning and Growth to enable the appointment of the Council’s directors to the New Company and any other decision that is required so as to effect the foregoing recommendations, including the approval of any amendments to existing contracts, termination of existing contracts and approval of new contracts required to effect the foregoing.

3.            That the revised SSDP ESH, as set out at Appendix 1 of the exempt report on the exempt Cabinet agenda, be approved so they can be adopted by the LLP (or, if applicable, the New Company).

4.            That approval for the appointment by the Council (as a member or shareholder of the JV) of an RP partner by the JV be delegated to the Cabinet Member for Economic Development and Regeneration in conjunction with the Director for Planning and Growth and the Lead Directors of Housing.

5.            That approval be given for the Council to directly undertake the demolition of ESH.

6.            That approval be given to undertake a procurement exercise to appoint a demolition contractor to undertake the demolition of ESH.

7.            That approval for the appointment of the demolition contractor and any consultant appointments required in respect of the demolition of ESH be delegated to the Cabinet Member for Economic Development and Regeneration in conjunction with the Director for Planning and Growth.

8.            That approval be given to the Council providing a contractual obligation to reimburse the JV its costs (capped at £2m for ESH and £2.5m for WMC) for fees incurred in achieving planning consent in the unlikely event that the opportunity sites are not redeveloped. In this scenario the land will be returned to the Council free from adverse rights and with detailed planning consent.

9.            That approval be given for the Council to incur additional consultancy fees for ongoing legal and professional advice as set out below:

Legal Advice                               £100,000

Valuation Advice                         £  75,000

Financial Advice                         £  10,000

Other Professional Advice          £  15,000

As costs incidental to the disposal of assets, these may be offset against capital receipts that ensue.

10.         That approval to incur any additional fees in relation to the Council meeting its obligations under the terms of the conditional JV agreement be delegated to the Cabinet Member for Economic Development and Regeneration, in conjunction with the Director for Planning and Growth and the Lead Directors of Housing as Edith Summerskill House is designated as Housing Land.

11.         To note that if negotiations with remaining leaseholders at ESH prove unsuccessful a compulsory purchase order (CPO) will be required to facilitate development.